The Implementation of IMF Programs: A Conceptual Framework

IMF supported programs have conventionally been assessed by examining their effects on intermediate variables and final outcomes. More recently greater attention has been paid to implementation on the assumption that in order to work programs need to be implemented. Empirical studies have begun to include political economy variables in an attempt to explain implementation. They have used the concept of ‘ownership’ to provide a theoretical foundation. This paper provides an alternative conceptual framework based on the marginal benefits and costs of implementation. It goes on to discuss policies that might be expected to improve implementation based on this framework.IMF

The Implementation of IMF Programmes: A Conceptual Framework and a Policy Agenda

The success of IMF supported programmes has conventionally been assessed by examining their effects on intermediate variables such as fiscal deficits, monetary growth and exchange rates, and final outcomes, such as the balance of payments, inflation and economic growth. However, little or no distinction has been made between those countries that implement the conditions incorporated into programmes and those that do not. More recently greater attention has been paid to implementation on the assumption that in order to work programmes need to be implemented. Empirical studies have begun to include political economy variables in an attempt to explain implementation. They have used the concept of ‘ownership’ to provide a theoretical framework. This paper provides an alternative conceptual framework based on the marginal benefits and costs of implementation. It goes on to discuss a range of policies that might be expected to improve implementation.

Foreign exchange markets in south-east Asia 1990-2004: An empirical analysis of spillovers during crisis and non-crisis periods

The East Asian crisis of 1997 sparked an extensive literature in an effort to explain the causes and spread of heightened foreign exchange (FX) market pressures in the region. In this paper we model FX movements and calculate spillover effects covering the extended period between 1990 and 2004. Using Markov switching vector autoregressions, we find substantial evidence that FX correlations vary across crisis and non-crisis states, a result that bears implications for international portfolio diversification and reserve pooling. Contagion effects are also present during crises. Finally, we gauge the ability of stock market indices to forecast time-varying transition probabilities and discover positive resultsEast Asia, Currency Crisis

Should It Be Curtains for Some of the IMF’s Lending Windows?

Increasing attention is being paid to IMF governance, and the structure and size of the Fund’s lending operations. However, less interest has been shown in the array of lending windows through which the IMF makes resources available. There have nonetheless been clear trends over recent years in the extent to which the windows are used. What discussion has occurred has been largely qualitative. In this paper, and as far as the data allow, we adopt a quantitative approach and focus on the extent to which the economic circumstances in which countries sign extended and concessionary arrangements differ from those in which they sign conventional stand bys. On this basis, we claim that there is a strong case for discontinuing the EFF but for continuing the PRGF. The paper also discusses, more broadly, reforms to the structure of the IMF’s lending windows.

Explaining IMF Arrangements: Was Asia Different?

Claims have been made that capital account crisis (CAC) countries are discernibly different in terms of the characteristics that lead them to borrow from the IMF. This paper tests these claims. It uses a conventional model of IMF lending to estimate the probability of countries having an IMF arrangement on the basis of key economic circumstances. In particular it examines countries that have been identified by the Fund as capital account crisis countries but it also looks at a number of comparator countries. The findings suggest that there are some regional differences between CAC countries, but also differences within regions. Broadly speaking the findings confirm that Asian economies around the time of the 1997/98 crisis tended to turn to the IMF for financial support more quickly than would have been anticipated.

Foreign Exchange Pressures in Latin America: Does Debt Matter?

Latin American countries have been in the eye of economic and ¯nancial storms several times in recent years. Advice from the International Monetary Fund has consistently highlighted the need for sound fiscal policies and lower debt levels. But is public debt relevant? Following a brief discussion of the theoretical issues involved, this paper examines empirically the relationship between public indebtedness and pressures in the foreign exchange market. Alternative measures are used to capture the latter and the analysis controls for a de facto classi¯cation of exchange rate regimes. Estimations of static and dynamic panels for 28 Latin American and Caribbean (LAC) countries report substantial fiscal effects.currency crises, public debt, latin america

The Political Economy of A Trade-First Approach to Regionalism

Regional integration has become commonplace in the world economy. Moreover, there is clear evidence of a ‘trade first’ approach to regionalism. What is the logic behind this approach? Is it that trade integration prepares the ground for monetary integration by helping to fulfil optimum currency area criteria? Having analysed the economic interrelationship between regional trade integration and monetary union, the paper contends that the ‘trade first’ strategy can instead be explained in political economy terms; there is a higher political return to trade integration. The paper concludes by examining the implications for the future of both regionalism and multilateralism.